Tk1,500 crore loss feared for garments accessories

The garments accessories and packaging sector may incur Tk1,200-1,500 crore in losses if the present deadlock in import from China continues for 3-4 months further.

The Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association on Saturday expressed this concern at a press conference in Dhaka about the damaging effects of coronavirus in China.

The association's President Md Abdul Kader Khan said about 40 percent of raw materials for this sector are bought from China. "But already our importers have suffered over Tk200 crore in losses due to the extension in China's New Year holidays."

Bangladesh exported garments accessories worth $7.5 billion in the last financial year (2019-20), he pointed out.

In China, annual holidays usually expand from seven to 10 days.

"We import raw materials from China keeping this period in our mind. But this year, we are already in a business gap of 8-10 days because of this holiday extension," Kader Khan continued.

He further said some goods have reached the port but there are no documents. On the other hand, there are documents but no goods. Besides, the Chinese banks also remain closed.

"All these have created trouble for importers, making them count late fees. Also, we cannot export goods in time," he added.

Meanwhile, there is an indication that the Chinese holiday period may extend further, creating more concerns among the businessmen.

"Most of our suppliers are scheduled to open business after February 21. If the plan changes for any reason, we will have to look for alternative means for export," said Kader Khan.

Currently, 1,744 registered institutions operate in the garments accessories and packaging sector in Bangladesh. The sector provides employment to over 7.5 lakh people, according to the association.

About 35 types of raw materials, including yarn, fabric, duplex board, white liner, thermoplastic mould, carton, sewing threads, etc, are imported from China.

The companies in the garments accessories also supply raw materials for leather and pharmaceuticals industries alongside the apparel sector, said the association.

When asked if businessmen have any scope to import from sources alternative to China, Rafez Alam Chowdhury, consultant to the association, said they cannot import materials as per their will.

"Generally, we import goods through bonded-warehouse facilities. We cannot import products beyond limit. Nor can we import from other sources every now and then. Factories have to import goods based on their limit," he said.

"If we want to buy raw materials from India, for instance, we will have to spend a much bigger amount. Besides, India does not have a sufficient amount of raw materials to supply us with," he added.

Regarding the impact of the import impasse on the local market, Kader Khan said prices of some goods have already increased by 100 percent. "This means we have already started facing losses. If the situation is prolonged by 3-4 months more, the export sector will be hit badly."

If raw materials are unavailable, labourers will have no work, thus no wages either. He also expressed the fear that businessmen will have to pay bank interest by doing no business.

To help business in the garments accessories sector survive amid this present crisis, the association urged the government to take necessary steps to release goods coming in after February 21 on an urgent basis.

Rafez Alam hoped all concerned, including the customs and the central bank, will come forward in this regard.

A number of other business leaders were also present at the press conference.